Argentina - Economic memorandum

Report No. 4979-AR Economic Memorandum on Argentina June 22,1984 Latin America and the Caribbean Regional Office FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EOUIVALENTS Currency Unit = Argentine Peso ($a) Exchange Rate Effective = June 20, 1984 USS 1.00 = Sa 48.4 $a 1,000 = US $20.66 $a 1,000,000 = USS 20,661.2  FOR OFFICIAL USE ONLY PREFACE This report is based on the findings of a mission that visited Argentina in June/July 1983. The mission was composed of: Fred D. Levy (Mission Chief) John H. Johnson (Macroeconomic analysis and fiscal policy) Kutlay Ebiri (Trade policy-industry) Milka Casanegra de Jantscher (Consultant - tax system) Walter Schaefer-Kehnert (Consultant - agriculture) Juan Villarzu (Consultant - financial sector) Maria Teresa Benito (Research Assistant) This report examines the difficult economic situation facing Argentine policymakers at the end of 1983 as a new government assumed power. Recent experience with stabilization and economic liberalizatiou is reviewed, distinguishing between the 1976-78 period-when rapid devaluations, a reduction of the fiscal deficit and the easing of price and financial controls helped stimulate exports and growth-and the period after October 1978 when inconsistencies between exchange rate, import liberalization, wage, and fiscal policies produced a deep recession, high levels of inflation, and a serious balance of payments and external debt crisis. Despite present difficulties, the report concludes that the Argentine economy possesses important elements of long-term strength, which, with sustained world economic recovery and sound domestic policies, should permit a resumption of growth, at the same time that the burden of external debt is gradually reduced. The report reconmends a number of medium-term measures to improve fiscal management, including better tax administration; provide adequate export incentive to both agriculture and industry; and raise the efficiency of the financial system in mobilizing and allocating domestic savings. This document has a restricted distribution and may be used by recipients only in the performnce of their offcial duties. Its contents may not otherwise be disdosed without World Bank authorization. rC  ECONOMIC MEMORANDUM ON ARGENTINA Table of Contents Page No. COUNTRY DATA GLOSSARY OF ACRONYMS i LIST OF TABLES iii SUMMARY AND CONCLUSIONS xi